"There's a demand-supply mismatch. Only 20-25% of the properties in Bangalore are in the price range of Rs 35-70 lakh category while the current demand is driven by this segment. Around 70% of the buyers are looking to purchase properties in this bracket," said BM Poonacha, head-land and special projects, LJ Hooker Project Marketing India.

While apartment sales in the price range of Rs 35-70 lakh have grown 20-25% in Bangalore, there's a drop in demand for property priced over Rs 1 crore, he said.

Builders are blaming the civic and urban development authorities for delay in approvals. "Most of the launches are not taking place as there are no approvals coming from the civic authority. Once approvals gain momentum, we can expect project launches to increase, and that can lead to some softening in housing prices. There's no possibility of any cartelisation among developers as each one is incurring huge interest cost for any delay in project launch," said Paras Gundecha, president of Maharashtra Chamber of Housing Industry.

Others agree, but what Gundehca is not saying here is that builders are also unwilling to bring down prices and are either delaying launches or selling non-core businesses in order to raise cash and build a cushion for themselves.

"Reducing prices might not help in reviving the demand beyond a point, as buyers would expect further drop in prices and defer their buying decisions. Rather, developers are going slowly with their launches," Jehani said.

According to her, developers prefer to ease their debt burden by selling land parcels or non-core assets rather than directly reduce prices of their projects. They also feel there's no scope for any price reduction in the first place.

By going slow with their launches, builders might open themselves to charges of cartelisation. But so far, very little has been proved and the Competition Commission of India (CCI) did not respond to an ET query on whether a probe was underway on alleged cartelisation by builders.

"All input costs have gone up, including government taxes like property tax and development charges. Labour cost has shot up nearly 60%; cement and steel prices have also increased over 30% in the last one year. There's a limit up to which developers can take the hit," said Lalit Kumar Jain, national president of the Confederation of Real Estate Developers Association of India (CREDAI).

"It's impossible to expect prices to soften hereon, but at the first opportunity, prices should move up 10-15% to compensate developers against the input cost rise," said Jain.

"Developers' margins are clearly under pressure due to rising costs. Operating margins are now around 30-35%. This is a reasonable number to be in the business, but if we remove the rental income some of the developers are earning from their commercial properties, it would move a lot lower," said Aashiesh Agarwaal of Edelweiss Securities.